NTPC uses e-auction route for coal buy

Domestic coal shortage has prompted state-run power producer NTPC to buy coal through e-auction, at rates lower than the market prices. The coal producer would have more than doubled its imported coal consumption by the end of the current financial year in over two years.

The two-pronged approach to make up for the shortage will, however, become less aggressive once it is able to put its captive blocks into production.

NTPC has decided to fix a ceiling of 10 per cent for using imported coal of the total requirement. The ceiling has been kept as the high amount of imported coal increases the cost of power and none is willing to buy high-cost power, a senior official from NTPC said.

The company started buying coal through e-auction in 2010-11, but it constitutes a small percentage in its total consumption. NTPC enters into agreement for buying coal through such arrangement at rates below the market price since there is an assured buying of coal. These are agreements other than fuel supply agreements (FSA) with Coal India (CIL) and Singareni Collieries Company Ltd (SCCL), the official said.

NTPC imported 6.3 million tonnes (mt) (equivalent to 10.14 mt of domestic) coal in 2009-10 and it is expected to import 14 mt (equivalent to 23 mt of domestic coal) in 2011-12. The total coal consumption in 2009-10 was over 140 mt and expected to reach 164 mt by the end of this financial year.

Currently, it blends 10-12 per cent of imported coal and doesn't want to go not beyond that limit as it increases cost of power.

However last year, the Central Electricity Authority (CEA) had issued an advisory asking all power utilities and equipment manufacturers to ensure in future projects boilers and auxiliaries should be designed for blending at least 30 per cent or more imported coal.

As of now, only 10-15 per cent of imported coal is blended as equipments are not designed for higher blending. Also, it leads to pollution and corrosion of boilers.

NTPC to begin captive coal production
The first coal production from the company’s own mine will begin from 2012-13 with 2.34 mt and is targeting 47 mt per annum by 2017 from its five coal blocks. It has also formed a joint venture company with CIL —CIL NTPC Urja Pvt Ltd for development of Brahmini and Chichro Patrismal coal mine blocks and also acquisition of mines in India and abroad.

NTPC, currently, has a capacity of over 36,000 Mw. The target is to take the total capacity addition to 66,000 Mw by the end of 12th Plan.

The company is also exploring opportunities for acquisition of stakes in coal mines in Indonesia, Mozambique and Australia. Besides, International Coal Ventures Ltd has been incorporated for overseas acquisition, operation of coal mines or blocks.